Expert
Profitability ratios
How efficiently sales become profit.
Profitability ratios
Ratios turn raw figures into comparisons you can act on. Profitability ratios tell you how efficiently your business turns sales into profit.
- Gross margin = Gross profit ÷ Revenue — pricing and production efficiency
- Net margin = Net profit ÷ Revenue — overall profitability after all costs
Track margins over time. A falling gross margin often means rising costs you have not passed on in your prices.
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